The Manning times. [volume] (Manning, Clarendon County, S.C.) 1884-current, 1887-12-14
THE WANING "MAGIc CITY"
The Downward Trend of the Inflated Ala
bama Towns--Dcpression in Birmingham
a Sad COLLAPSE in Prospect.

/
Tho Downward Trend of the Inflated Ala
bama Towns--Dcpression in Birmingham
A Sad Collapse in Prospect.
(From the New York Herald.)
The New South. It is now nearly a
wear since the boom in that section cul-
minated. The whole country has been
: ringing with the fairy tale of the South S
awakening, of her wonderful mineral re-
sources, of the new towns and cities
springing up, of fortunes made in a day
and all the rest OF 1t.
Now that the fermentation has SUBJ
sided, it is worth while to blow off the
froth and glance at what is under it.
Well, the situation is seriously strained.
In the lew manufacturing cities every
body has been doing a little more than
was safe, and, consequently, is now bor-
rowing. Money commands sixteen to
eighteen per cent. and even more, and
the lowest rate at the banks on absolute
ly safe security is one per cent. a month.
The boom nas subsided, but the people
are trying to sustain real estate on the
absurdly high level to which it was lifted
in the period of crazy speculation. 1t
rests upon vast trestle work of inter-
related credits.
Landowners, hotel keepers, agents,
shopkeepers, mechanics-the humble
owner OF single lot not ye5 half paid
for and the land company with millions
of capital-are all trying to talk up and
hold up values. The creditor does not
dare to press the debtor, for if one brick
in the row is toppled over others must
inevitably go, too, apd no one could tell
where the trouble would end.
Everybody is hoping for another
boom-for rising tide Of speculation
on which he may float out of his Difficult
ties. He feels sure that this revival is
coming soon, but pending its fancie
advent his needs are pressing. He must
have money to tide over, and to get it
he is obliged to pay whatever the lender
chooses to ask. In many instances the
rates paid amount to confscation. The
borrowers are doomed.
The state of affairs in the new manu-
featuring city Of Birmingham, Ala, is
fairly representative. During the
'sboom" one year ago, the Elyton Land
Company (Which founded the city sold
no end OF building lots at enormous
prices, taking one-fourth cash and notes
at one, two and three years respectively
for the remaining three-fourths. The
cne year notes have Of late been falling
due from day to day, but the makers are
unable to pay.
The lots were sold for absurdly high
prices-as high as 81, 500 per front foot
on the ragged outer edge of so-called
'sbusiness" streets. The twenty-five per
cent. cash payment IN most instances
probably represents the full intrinsic
value of the property, or more than the
value, but most Of the lots were bought
on speculation, and in many instances
lots, after sale by the company, have
passed through several hands ct always
advancing prices; so that they are now
nominally owned by persons several re-
moves from the original buyers.
Now that the boom has died out and
there is no demand for lots, the last
buyers cannot sell except at great sacri-
fee. But the lot owners and the COM
pany are alike interested in keeping
property up on its fictitious level. Cool
headed investors who visit the city are
repeled by the prices asked, to the per
pnanent injury Of the town. True, the
city is ringing just now with the sounds
of hammer and trowel, but most Of this
work is being done under contracts made
last spring or summer while the fever
was On. l could learn Of few or no new
contracts being made.
The land company is now carrying"
those who bought its lots, and individu
ais who sold real estate are doing the
same by their debtors. If the company
could seize the lots it could not sell
them, so that the notes (Which bear in
terest, of course) are more valuable than
the s'dirt, % provided the drawers succeed
in pulling through, and if they do not;
the company can then recover the land
anyhow. From selfish motives the com
pany must extend the notes OF delin-
quents and help them along-the con-
cern must be kept agoing or be smashed.
With the passing Of the boom business
has fallen of and shopkeepers burdened
with frightfully high rents are in danger
of going to the wall. The company, it
UlaJ NC SOIlu uOG 1OIOS1ooS IL ~
would, for it has not mortgage on the
lands sold. Instead Of giving the buyer
deed and taking mortgage for the
balance Of the purchase money the COM
pany gives simply bond that the title
Shall be vested in .the:holder when the
last payment shsa be made.
The ease with which these bonds could
be transferred was an element IN foster
ing the wild speculation. To wipe out
: the claims Of the holders of these, how
ever, would involve long and tedious
litigation. At Decatur and some other
new cities they are wiser; they give the
buyers deeds and clap mortgages on the
property for the balance Of the purchase
money.
r The Elyton Land Company passed its
!; dividend the other day, thus indirectly
confirming the correctness of the state
ments made above. Instead of paying
{ its cash dividend the company issued
script convertible into bonds. The script
represents, the company says, s., 400,
f 600 of good notes in its treasury, and as
these cannot be disturbed, they are
going to make an issue of bonds instead.
In other words, instead of the usual cash
dividend the stockholders are offered a
r mortgage on their own property, and
this because the drawers of the notes are
probably "lying down.